Every business valuation should start with a balance sheet analysis. It is easy to get lost in numbers and a range of what if scenarios when evaluating stocks for investment. While the financial statements may be standardized for GAAP, each line item in these statements have a history behind it that is unique to the company in question. Sometimes one needs to go beyond the numbers to understand the business to determine if the stock in the company under consideration is worthy of investment. Investors often get bogged down in projections and estimates. However a balance sheet is real and known and presents a better indicator of value with data that is more likely to give us a conservative estimate of the value.
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Stock Market Today Stock market today is filled with fear and investor pessimism. The economic conditions in US, Europe and around the world are not making it easy for investors to continue to invest. And with the federal government running up excessive debt, and the inevitable credit rating downgrade by S&P, the future of the… [Read More]
Apple (AAPL) is a phenomenal growth story and its stock has rewarded the investors well over the last few years. But it appears that even with its Market Capitalization touching $330 B, and the stock having posted a 47% gain in the last 12 months, the shares are still undervalued. The Value in Apple Lies… [Read More]
The way to identify an undervalued stock is to empirically determine an intrinsic value of the stock that serves as a benchmark against which the stock price can be compared. If this intrinsic value is higher than the stock price in the market today, than the stock can be considered undervalued and vice versa. Over the years, many methods of establishing this valuation benchmarks have been devised and are in use today. Book Value of a stock is one such method.
On July 29, National Presto Industries (NPK) issued its 2nd quarter earnings report. As the company has guided investors through its earlier reports, the 2nd quarter was indeed challenging for the company. National Presto’s sales declined from $117 M in Q2 2010 to $98.3 M in Q2 2011. Its net earnings also declined to $10.82… [Read More]
To know if the price you are paying for a stock is fair, you need to have a good estimate of the value of the underlying business, or the intrinsic value that each share represents. While the stock price fluctuates based on the demand and supply of the shares in the secondary market, the business value only changes when the business conditions change. Over time, the intrinsic value and the stock price tend to correlate, in the short term there might be discrepancies large enough that an intrepid investor can exploit for profit. Learning about intrinsic value will help you value stocks to buy.
It is always instructive to try and find stocks of companies that are in some way or other similar to Berkshire Hathaway (BRKA). Ask any value investor about what they consider as mini Berkshire Hathaway, and their picks will likely be different depending on how they interpret Mr Buffett’s investments.
For this list, I have tried to find companies that fit one or more of the following criteria
Media is having a field day discussing the nightmare that will unfold on the citizenry if US does default on its federal debt. No doubt that the possibility exists, and a US debt default will have a large impact on our personal finances. But as value investors, we are more inclined to look past short… [Read More]
Most of the mutual fund industry and the financial planning establishment will have you believe that the only smart way to invest is passive investing, that is, buy into a heavily diversified portfolio and rebalance your portfolio periodically to achieve the perfect asset allocation. Stock picking, they say, is a fools errand. This assertion is often backed up by statistics and research that seem to offer support for the two most widely promoted apparent truisms in investing:
TTM Technologies was brought to my attention by one of the subscribers to the VSG Premium program. As a result of the interest I decided to review the company to see what merits it might hold for someone who is looking to buy a good solid business at an attractive price. The Business of TTMI… [Read More]
Value Stock Guide Premium Access is now open as of Mar 31. There was a little technical delay but it is all squared away now. I have also decided to offer two different subscription options, annual and quarterly. If you pre-registered before the launch, I will be sending out your complimentary access over this weekend…. [Read More]
Profitable investing in the stock market is not difficult. It does require some basic understanding of how the markets and businesses work. Fortunately, this is not hard to learn.
This is the basic premise of the book “Why Are We So Clueless About the Stock Market” by Mariusz Skonieczny. Mariusz runs the Classic Value Investors LLC, and it is not surprising that he espouses buying stocks when they are priced below the value that the business represents.
Back during my teen years, I would read every book I could get my hands on about Buffett and Graham. And of course if you know anything about Buffett’s buying history, then you know the story of why he chose to gobble up as much Coca-Cola stock as he could. To most people at the… [Read More]
Adult Diapers, Defense supplies, and small kitchen appliances – product portfolio as diverse and uninspiring as these, topped up with no-frills, relentless execution, long term contracts and transparent and shareholder friendly policies, and stellar dividend history – this is National Presto Industries Inc. for you. The company has continued to show revenue growth and profitability… [Read More]
Have we not learned anything from history? This time it is different. How often have we heard this and how often has it turned out not to be different? Capital markets and investing have been around for decades, and there is not really much new to see or learn. The problem is that even the… [Read More]